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HomecryptocurrencyChinese bitcoin traders still wield 'enormous influence' despite Beijing's 4-year crypto crackdown

Chinese bitcoin traders still wield ‘enormous influence’ despite Beijing’s 4-year crypto crackdown

  • Chinese bitcoin traders continue to thrive despite Beijing's four-year crackdown on cryptocurrencies, experts told CNBC.
  • China shut down local exchanges and banned initial coin offerings in 2017, but this year, there have been renewed fears of a harsher crackdown from authorities.
  • Bitcoin's price has been impacted by recent comments from industry bodies and regulators regarding cryptocurrency in China.

In this article

In this photo illustration, the Bitcoin logo is seen on a mobile device with People's Republic of China flag in the background. (Photo Illustration by t/SOPA Images/LightRocket via Getty Images)Budrul Chukrut | SOPA Images | LightRocket | Getty Images

GUANGZHOU, China — Chinese bitcoin traders continue to thrive despite Beijing's four-year crackdown on cryptocurrencies, experts told CNBC.

On Friday, Chinese Vice Premier Liu He said it is necessary to "crack down on Bitcoin mining and trading behavior" to prevent risks to the "social field." For a long time, Chinese authorities have been concerned about the speculative nature of cryptocurrencies and their risk to the stability of the financial system. The vice premier's latest comments have sparked fears of an intensified crackdown.

But tough words from Beijing are not new. In 2017, China shut down local cryptocurrency exchanges and banned so-called initial coin offerings (ICOs), a way to raise money for crypto companies by issuing digital tokens. 

In November 2015, about 92% of bitcoin trading was done with the Chinese currency renminbi, according to data from CryptoCompare, a cryptocurrency data company. Chinese traders had the ability to move the market quite significantly on any news related to bitcoin in China. But by November 2017, Chinese renminbi accounted for just 0.07% of the total bitcoin market.

However, that masks the fact that Chinese traders still remain a significant force in bitcoin trade, according to Matthew Graham, CEO of Sino Global Capital, a Beijing-based venture capital firm focused on blockchain technologies.

"The waning influence of Chinese bitcoin traders is an exaggerated story," Graham told CNBC. "The fact is that Chinese traders still wield enormous influence."

China's role in bitcoin was thrust back into the spotlight last week after authorities reiterated that financial institutions should not get involved in cryptocurrency businesses such as trading or helping to exchange fiat into digital coins. These were not new regulations.


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